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Error while changing the owner

Question

I recently started facing the problem when changing the owner of the folder. I am the adminstrator and owner of that particular folder but it showing " An error occured applying security information to: XXX folder. this Security ID may not be assigned
as the owner of this object." when i click continue. it is showing "unale to set new owner on folder.. You dont have restored privilege required to set this user/group as owner".

Have also tried creating new folder but no luck. Earlier i used to have the rights to change the owner. working on some script ran into errors so tried manually and receive the same error.

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